Aquestive(AQST) - 2024 Q3 - Quarterly Report

PART I – FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) This section presents Aquestive Therapeutics' unaudited condensed financial statements, showing increased cash, reduced liabilities, and a decreased stockholders' deficit, alongside net losses for the periods ended September 30, 2024 Condensed Balance Sheet Highlights (In thousands) | Metric | Sep 30, 2024 | Dec 31, 2023 | | :--------------------------- | :----------- | :----------- | | Cash and cash equivalents | $77,893 | $23,872 | | Total current assets | $96,570 | $40,966 | | Total assets | $109,958 | $57,418 | | Total current liabilities | $15,152 | $18,308 | | Total liabilities | $155,378 | $163,905 | | Total stockholders' deficit | $(45,420) | $(106,487) | Condensed Statements of Operations and Comprehensive (Loss) Income (In thousands) | Metric (3 Months Ended Sep 30) | 2024 | 2023 | | :----------------------------- | :---------- | :--------- | | Revenues | $13,542 | $13,002 | | Total costs and expenses | $21,832 | $15,379 | | Loss from operations | $(8,290) | $(2,377) | | Net (loss) income | $(11,509) | $(2,035) | | Metric (9 Months Ended Sep 30) | 2024 | 2023 | | :----------------------------- | :---------- | :--------- | | Revenues | $45,694 | $37,377 | | Total costs and expenses | $62,886 | $48,568 | | Loss from operations | $(17,192) | $(11,191) | | Net (loss) income | $(27,082) | $241 | Net (Loss) Earnings Per Share (Dollars per share) | Metric (3 Months Ended Sep 30) | 2024 | 2023 | | :----------------------------- | :----- | :----- | | Basic | $(0.13) | $(0.03) | | Diluted | $(0.13) | $(0.03) | | Metric (9 Months Ended Sep 30) | 2024 | 2023 | | :----------------------------- | :----- | :----- | | Basic | $(0.32) | $— | | Diluted | $(0.32) | $— | Condensed Statements of Cash Flows (In thousands) | Metric (9 Months Ended Sep 30) | 2024 | 2023 | | :----------------------------- | :---------- | :--------- | | Net cash used for operating activities | $(29,270) | $(1,438) | | Net cash used for investing activities | $(144) | $(979) | | Net cash provided by financing activities | $83,435 | $61 |\ | Net increase (decrease) in cash and cash equivalents | $54,021 | $(2,356) | Notes to Unaudited Condensed Financial Statements This section provides detailed notes on Aquestive's operations, accounting policies, financial instruments, debt, equity, and legal contingencies, highlighting product launches and agreement terminations Note 1. Company Overview and Basis of Presentation Aquestive Therapeutics, a pharmaceutical company, launched Libervant® in April 2024, is advancing its Anaphylm™ and Adrenaverse™ pipeline, and secured substantial net proceeds from 2024 equity offerings - Aquestive Therapeutics, Inc. launched Libervant® (diazepam) Buccal Film in April 2024 for acute treatment of seizure activity in epilepsy patients aged two to five years[20][99] - The company is developing Anaphylm™ for severe allergic reactions and AQST-108 (epinephrine) topical gel for alopecia areata[20][101][104] Equity Offering Proceeds (In thousands) | Equity Offering Type | Period Ended Sep 30, 2024 (Net Proceeds) | | :---------------------------- | :--------------------------------------- | | ATM facility (9 months) | $11,855 | | Underwritten Public Offering | $72,868 | - The company dissolved its subsidiaries as of March 31, 2024, with no material impact on financial statements[23] Note 2. Summary of Significant Accounting Policies The company adopted new accounting pronouncements ASU 2020-06 and ASU 2022-03 without material impact and is evaluating ASU 2023-07 and ASU 2023-09 for future effects - Aquestive is no longer an 'emerging growth company' but remains a 'smaller reporting company'[24] - Adopted ASU 2020-06 (Convertible Instruments) and ASU 2022-03 (Fair Value Measurement of Equity Securities) on January 1, 2024, with no material impact[24] - Evaluating ASU 2023-07 (Segment Reporting) and ASU 2023-09 (Income Tax Disclosures) for future impact[24][25] Note 3. Risks and Uncertainties The company assesses liquidity based on funding operations and development, expecting sufficient cash and equity market access to cover at least the next twelve months despite historical net losses Liquidity Position (In thousands) | Metric | Sep 30, 2024 | | :---------------------- | :----------- | | Cash and cash equivalents | $77,893 | | Accumulated deficits | $(346,159) | - The company's ongoing business, cash, expense management (including ceasing R&D activities), and access to equity markets (ATM facility, Lincoln Park Purchase Agreement) provide near-term liquidity for at least the next twelve months[27] Note 4. Revenues and Trade Receivables, Net Total revenues increased by 22% for the nine months ended September 30, 2024, driven by significant license and royalty revenue from terminated agreements, with Indivior remaining a major customer Revenue Breakdown (In thousands) | Revenue Type (3 Months Ended Sep 30) | 2024 | 2023 | Change ($) | Change (%) | | :----------------------------------- | :---------- | :--------- | :--------- | :--------- | | Manufacture and supply revenue | $10,671 | $11,409 | $(738) | (6%) | | License and royalty revenue | $2,162 | $1,103 | $1,059 | 96% | | Co-development and research fees | $492 | $490 | $2 | —% | | Proprietary product revenue, net | $217 | $— | $217 | N/M | | Total revenues | $13,542 | $13,002| $540 | 4% | | Revenue Type (9 Months Ended Sep 30) | 2024 | 2023 | Change ($) | Change (%) | | :----------------------------------- | :---------- | :--------- | :--------- | :--------- | | Manufacture and supply revenue | $29,312 | $32,807 | $(3,495) | (11%) | | License and royalty revenue | $14,514 | $3,503 | $11,011 | 314% | | Co-development and research fees | $1,651 | $1,067 | $584 | 55% | | Proprietary product revenue, net | $217 | $— | $217 | N/M | | Total revenues | $45,694 | $37,377| $8,317 | 22% | - License and royalty revenue for the nine months ended September 30, 2024, increased significantly by 314% due to one-time recognition of $11,544 thousand in deferred revenues from terminated licensing and supply agreements[131] - Proprietary product revenue, net, increased by $217 thousand for both three and nine months ended September 30, 2024, due to the launch of Libervant for pediatric patients[129][131] - Indivior and Haisco represented approximately 59% and 15% of total revenue, respectively, for the nine months ended September 30, 2024, with Indivior also accounting for approximately 67% of total trade and other receivables as of September 30, 2024[39] Note 5. Material Agreements This section details significant commercial agreements, including those with Indivior, Sunovion, Zevra, Haisco, Pharmanovia, and Assertio, noting the impact of terminated agreements on revenue recognition and capitalized commissions - The Haisco Agreement for Exservan™ in China was terminated in June 2024, leading to the recognition of $7,000 thousand in deferred revenue and expensing of $134 thousand in capitalized commissions[48][49] - The MTPA license agreement for Exservan in the U.S. was mutually terminated in June 2024, resulting in the recognition of $3,317 thousand in deferred revenue and expensing of $57 thousand in capitalized commissions[54] - Sunovion voluntarily withdrew KYNMOBI from the U.S. and Canadian markets in June 2023, making additional contingent payments under the Monetization Agreement unlikely[45][125] - The Pharmanovia Agreement for Libervant was amended in March 2023 to expand the licensed territory globally (excluding U.S., Canada, China), with a non-refundable payment of $2,000 thousand received[51] Note 6. Financial Instruments – Fair Value Measurements The company classifies financial assets and liabilities at fair value into Level 1, 2, or 3 hierarchy, with warrants and royalty obligations valued using Level 3 inputs, and the embedded put option on Senior Secured Notes valued at $0 due to refinancing - Warrants and Royalty Right Agreements are valued using Level 3 inputs, based on independent third-party appraisals and internal management estimates[55] - The embedded put option on the 12.5% Senior Secured Notes is no longer in place as of September 30, 2024, due to refinancing[65] Royalty Right Agreements Valuation Inputs | Valuation Methodology | Significant Unobservable Input | Weighted Average (range, if applicable) | | :------------------------------ | :----------------------------- | :-------------------------------------- | | Probability weighted income approach | Discount Rate | 15% | | | Probability of Success | 75% | | | Projected Years of Payments | 2025 - 2033 | Note 7. Inventories Total inventory increased slightly to $7,021 thousand as of September 30, 2024, from $6,769 thousand at December 31, 2023, driven by an increase in raw materials, partially offset by decreases in packaging materials and finished goods Inventory Components (In thousands) | Component | Sep 30, 2024 | Dec 31, 2023 | | :--------------- | :----------- | :----------- | | Raw material | $3,240 | $2,118 | | Packaging material | $2,731 | $3,028 | | Finished goods | $1,050 | $1,623 | | Total inventory| $7,021 | $6,769 | Note 8. Property and Equipment, Net Net property and equipment decreased to $3,848 thousand as of September 30, 2024, from $4,179 thousand at December 31, 2023, primarily due to accumulated depreciation and amortization totaling $43,358 thousand Property and Equipment, Net (In thousands) | Component | Sep 30, 2024 | Dec 31, 2023 | | :-------------------------------------- | :----------- | :----------- | | Machinery | $20,317 | $20,248 | | Furniture and fixtures | $769 | $769 | | Leasehold improvements | $21,386 | $21,386 | | Computer, network equipment and software| $2,685 | $2,627 | | Construction in progress | $2,049 | $2,033 | | Less: accumulated depreciation and amortization | $(43,358) | $(42,884) | | Total property and equipment, net | $3,848 | $4,179 | - Total depreciation, amortization, and impairment related to property and equipment was $493 thousand for the nine months ended September 30, 2024, down from $760 thousand in the prior year period[59] Note 9. Right-of-Use Assets and Lease Obligations The company primarily accounts for its realty leases as operating leases with remaining terms between 3.5 and 9.0 years, incurring $1,345 thousand in operating lease expenses for the nine months ended September 30, 2024 - Operating lease expenses for the nine months ended September 30, 2024, totaled $1,345 thousand, including $349 thousand in variable lease expenses[60][61] - The company uses an incremental borrowing rate ranging from 14.8% to 15.6% to determine the present value of lease payments[60] Note 10. Intangible Assets, Net Intangible assets, net, decreased to $0 as of September 30, 2024, from $1,278 thousand at December 31, 2023, primarily due to a gain on contract termination and an adjustment to the remaining balance of an intangible asset in June 2024 Intangible Assets, Net (In thousands) | Component | Sep 30, 2024 | Dec 31, 2023 | | :------------------------- | :----------- | :----------- | | Purchased intangible | $3,858 | $3,858 | | Purchased patent | $509 | $509 | | Less: accumulated amortization | $(4,367) | $(3,089) | | Intangible assets, net | $— | $1,278 | - In June 2024, a net gain of $300 thousand was recorded within Other income, net, on the Condensed Statements of Operations and Comprehensive (Loss) Income, related to a contract termination and intangible asset adjustment[62] Note 11. Other Non-current Assets Other non-current assets decreased to $4,230 thousand as of September 30, 2024, from $5,438 thousand at December 31, 2023, mainly due to a decrease in royalty receivable from Sunovion and expensed capitalized commissions Other Non-current Assets (In thousands) | Component | Sep 30, 2024 | Dec 31, 2023 | | :------------------------- | :----------- | :----------- | | Royalty receivable | $3,000 | $4,000 | | Other | $1,230 | $1,438 | | Total other non-current assets | $4,230 | $5,438 | - Commissions of $191 thousand capitalized under ASC 340 were expensed in Selling, general, and administrative expenses for the nine months ended September 30, 2024, due to contract terminations[63] Note 12. Accrued Expenses Total accrued expenses decreased to $5,025 thousand as of September 30, 2024, from $6,497 thousand at December 31, 2023, primarily driven by reductions in accrued compensation and interest payable Accrued Expenses (In thousands) | Component | Sep 30, 2024 | Dec 31, 2023 | | :-------------------------------------- | :----------- | :----------- | | Accrued compensation | $3,457 | $4,202 | | Real estate and personal property taxes | $473 | $337 | | Accrued distribution expenses and sales returns provision | $640 | $645 | | Interest payable | $17 | $1,013 | | Other | $438 | $300 | | Total accrued expenses | $5,025 | $6,497 | - The reduction in accrued compensation is due to payments of accrued bonuses, partially offset by current year accruals[64] - The decrease in interest payable is mainly due to the timing of interest payments on the 13.5% Senior Notes[64] Note 13. Long-Term Debt The company refinanced its 12.5% Senior Secured Notes with new 13.5% Senior Secured Notes due November 1, 2028, and issued Royalty Right Agreements granting tiered royalties on future sales of Anaphylm and Libervant, classified as debt and amortized as interest expense - On November 1, 2023, the company issued $45,000 thousand aggregate principal amount of 13.5% Senior Secured Notes due 2028, using proceeds to repay outstanding 12.5% Notes[66][145] - The 13.5% Notes bear interest at 13.5% per year, payable quarterly, with principal payments commencing June 30, 2026[66][145] - Royalty Right Agreements were issued in conjunction with the 13.5% Notes, granting noteholders tiered royalties (1.0%-2.0%) on worldwide net sales of Anaphylm and Libervant[67][124] - The allocated fair value of Royalty Right Agreements ($13,856 thousand) and an Exit Fee ($2,000 thousand), along with original issue discount and debt issuance costs, resulted in a total debt discount of $20,498 thousand, amortized as interest expense[68] Long-Term Debt and Royalty Obligations (In thousands) | Metric | Sep 30, 2024 | Dec 31, 2023 | | :----------------------------------- | :----------- | :----------- | | Total outstanding notes | $45,000 | $45,000 | | Unamortized discount (13.5% Notes) | $(13,900) | $(17,665) | | Notes payable, long-term | $31,100 | $27,335 | | Royalty obligations | $56,926 | $56,926 | | Unamortized discount (Royalty obligations) | $(38,091) | $(42,165) | | Royalty obligations, net | $18,835 | $14,761 | Note 14. Warrants The company has various outstanding warrants, including those issued with the 12.5% Senior Secured Notes and New Warrants to purchase 2,750,000 shares at $2.60 per share, exercisable after February 2, 2024 - Warrants to purchase 1,714,429 shares of Common Stock (exercise prices $4.25 and $5.38) related to the 12.5% Notes remain outstanding as of September 30, 2024[71][73] - New Warrants to purchase 2,750,000 shares of Common Stock were issued in August 2023, exercisable after February 2, 2024, at an exercise price of $2.60 per share[73] - No warrants related to Securities Purchase Agreements were issued or exercised during the nine months ended September 30, 2024[73] Note 15. Sale of Future Revenue The company sold its contractual rights to KYNMOBI royalties and milestone payments to Marathon, receiving $50,000 thousand to date, with the transaction recorded as a liability and interest expense discontinued due to KYNMOBI's market withdrawal - The company received an aggregate of $50,000 thousand from Marathon through September 30, 2024, from the sale of KYNMOBI royalties and milestone payments[74] - The transaction is accounted for as a liability related to the sale of future revenue, amortized using the effective interest method, with an initial effective annual interest rate of approximately 24.9%[74] - Due to KYNMOBI's withdrawal from U.S. and Canadian markets in June 2023, the company discontinued recording interest expense related to this sale in Q4 2022, and further contingent payments are unlikely[75][125] Liability Related to Sale of Future Revenue (In thousands) | Metric | Sep 30, 2024 | Dec 31, 2023 | | :----------------------------------- | :----------- | :----------- | | Liability at beginning of period | $64,490 | $65,259 | | Royalties related to sale of future revenue | $(935) | $(989) | | Amortization of issuance costs | $175 | $220 | | Liability at end of period | $63,730 | $64,490 | Note 16. Net (Loss) Earnings Per Share Basic and diluted net loss per share were identical for the three and nine months ended September 30, 2024 and 2023, as net losses rendered all potentially dilutive instruments anti-dilutive Net (Loss) Earnings Per Share (Dollars per share) | Metric (3 Months Ended Sep 30) | 2024 | 2023 | | :----------------------------- | :----- | :----- | | Basic | $(0.13) | $(0.03) | | Diluted | $(0.13) | $(0.03) | | Metric (9 Months Ended Sep 30) | 2024 | 2023 | | :----------------------------- | :----- | :----- | | Basic | $(0.32) | $— | | Diluted | $(0.32) | $— | - For the three and nine months ended September 30, 2024, and the three months ended September 30, 2023, all outstanding stock options, restricted stock units, and warrants were anti-dilutive and excluded from diluted EPS calculations due to net losses[77][80] Note 17. Share-Based Compensation Total share-based compensation expenses significantly increased to $4,696 thousand for the nine months ended September 30, 2024, primarily due to new grants of restricted stock units and stock options, with unrecognized expenses to be recognized over 1.96 and 1.56 years, respectively Share-Based Compensation Expenses (In thousands) | Expense Type (3 Months Ended Sep 30) | 2024 | 2023 | | :----------------------------------- | :-------- | :------- | | Manufacture and supply | $102 | $59 | | Research and development | $310 | $105 | | Selling, general and administrative | $1,165 | $610 | | Total share-based compensation expenses | $1,577| $774 | | Expense Type (9 Months Ended Sep 30) | 2024 | 2023 | | :----------------------------------- | :-------- | :------- | | Manufacture and supply | $271 | $155 | | Research and development | $788 | $277 | | Selling, general and administrative | $3,637 | $1,334 | | Total share-based compensation expenses | $4,696| $1,766| - Unrecognized compensation expenses for unvested service-based restricted stock units totaled $6,677 thousand, expected to be recognized over a remaining weighted average period of 1.96 years[82] - Unrecognized compensation expenses for non-vested stock options totaled $3,559 thousand, expected to be recognized over a remaining weighted average period of 1.56 years[88] - Market conditions vesting-based restricted stock units vest based on a Performance Price tied to the 30-day average of the common stock's closing prices, with vesting percentages ranging from 0% to 150% based on price thresholds[84] Note 18. Income Taxes The company recorded a 0% effective income tax rate for the three and nine months ended September 30, 2024, due to anticipated full-year pre-tax book losses and a full valuation allowance against net deferred tax assets, contrasting with 6.4% and 37.4% in 2023 Effective Income Tax Rate | Period (Ended Sep 30) | 2024 | 2023 | | :-------------------- | :--- | :--- | | Three Months | 0% | 6.4% | | Nine Months | 0% | 37.4%| - The 0% effective tax rate for 2024 is primarily due to anticipated full-year pre-tax book loss and a full valuation allowance against net deferred tax assets[89] Note 19. Contingencies The company is involved in over 560 product liability lawsuits related to Suboxone and intellectual property/competition litigation with Neurelis Inc., with ultimate outcomes and potential losses currently unestimable - Aquestive is a defendant in over 560 product liability lawsuits in the U.S. (MDL) and three proposed class actions in Canada, alleging dental injuries from Suboxone Sublingual Film[93] - Indivior has agreed to defend Aquestive in the Suboxone product liability litigation[93] - Neurelis Inc. filed a lawsuit against Aquestive in California alleging unfair competition, defamation, malicious prosecution, and trade libel, with trial scheduled for March 7, 2025[91] - Neurelis Inc. also filed a lawsuit against the FDA, challenging the approval of Libervant™ for epilepsy patients aged two to five years, seeking to vacate the approval and enjoin marketing until January 10, 2027, due to orphan drug market exclusivity[92] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on financial performance, highlighting revenue growth from one-time recognitions, increased operating expenses for R&D and commercialization, and bolstered liquidity from financing activities Forward-Looking Statements This section outlines the company's forward-looking statements regarding product development, regulatory approvals, commercialization, financial outlook, and market opportunities for Anaphylm™, AQST-108, and Libervant®, detailing various risks and uncertainties that could cause actual results to differ materially - Forward-looking statements cover the advancement and timing of Anaphylm™ and AQST-108 through clinical development and FDA approval, including NDA submission and launch plans[96] - Risks include delays in product development and clinical trials, regulatory approval failures, challenges in market access for Libervant due to orphan drug exclusivity, and the ability to secure sufficient capital[96][97] - The company assumes no obligation to update forward-looking statements after the filing date, except as required by law[97] Overview Aquestive Therapeutics, a pharmaceutical company, launched Libervant® for pediatric epilepsy in April 2024, is advancing its pipeline including Anaphylm™ and AQST-108, and leverages its proprietary PharmFilm® technology for licensed commercial products - Aquestive launched Libervant® (diazepam) Buccal Film in April 2024 for acute treatment of seizure activity in epilepsy patients aged two to five years[99][105] - Anaphylm™ (epinephrine) Sublingual Film is a product candidate for anaphylaxis, aiming to be the first non-device based, orally delivered epinephrine, with positive topline data from pivotal clinical studies and an OASIS study[101][102][103] - AQST-108 (epinephrine) topical gel is being developed for alopecia areata, with completed first human clinical study showing no serious adverse events and plans for a Phase 2a study in Q2 2025[104] - The company's licensed product portfolio generated $45,694 thousand in revenue for the nine months ended September 30, 2024[106] Critical Accounting Policies and Use of Estimates There have been no material changes to the company's critical accounting policies and use of estimates as previously disclosed in its 2023 Annual Report on Form 10-K - No material changes to critical accounting policies and estimates since the 2023 Annual Report on Form 10-K[109] JOBS Act and Smaller Reporting Company As of December 31, 2023, the company is no longer an 'emerging growth company' but retains its 'smaller reporting company' status, allowing it to benefit from certain exemptions from disclosure requirements - The company is no longer an 'emerging growth company' but remains a 'smaller reporting company' as of December 31, 2023[111] - As a smaller reporting company, it is exempt from auditor attestation requirements of Section 404(b) of Sarbanes-Oxley Act and has reduced disclosure obligations[111] Financial Operations Overview The company's financial operations are driven by four primary revenue categories and costs from manufacturing, R&D for pipeline products, SG&A activities, and interest expenses related to debt, royalty obligations, and future revenue sales - Revenues are generated from manufacture and supply, license and royalty, co-development and research fees, and proprietary product sales[113] - Costs and expenses are primarily from manufacturing, R&D for pipeline products (Anaphylm, AQST-108), and selling, general, and administrative activities, including Libervant commercialization[118][121][122] - Interest expenses include those on 12.5% and 13.5% Notes, royalty obligations, and the sale of future revenue (KYNMOBI monetization)[123][124][125] Results of Operations For the nine months ended September 30, 2024, total revenues increased by 22% to $45,694 thousand, driven by license and royalty revenue, while operating expenses rose significantly due to R&D and SG&A, widening the net loss Revenue Comparison (In thousands) | Revenue Type (9 Months Ended Sep 30) | 2024 | 2023 | Change ($) | Change (%) | | :----------------------------------- | :---------- | :--------- | :--------- | :--------- | | Manufacture and supply revenue | $29,312 | $32,807 | $(3,495) | (11%) | | License and royalty revenue | $14,514 | $3,503 | $11,011 | 314% | | Co-development and research fees | $1,651 | $1,067 | $584 | 55% | | Proprietary product revenue, net | $217 | $— | $217 | N/M | | Total revenues | $45,694 | $37,377| $8,317 | 22% | Expense and Other Income Comparison (In thousands) | Metric (9 Months Ended Sep 30) | 2024 | 2023 | Change ($) | Change (%) | | :----------------------------- | :---------- | :---------- | :--------- | :--------- | | Manufacture and supply | $13,352 | $16,152 | $(2,800) | (17%) | | Research and development | $15,363 | $10,216 | $5,147 | 50% | | Selling, general and administrative | $34,171 | $22,200 | $11,971 | 54% | | Interest expense | $8,343 | $4,064 | $4,279 | 105% | | Interest expense related to royalty obligations | $4,075 | $— | $4,075 | N/M | | Interest income and other income, net | $(2,703) | $(16,156) | $13,453 | (83%) | - R&D expenses increased by 50% due to higher clinical trial costs for Anaphylm and AQST-108, increased personnel costs, and higher share-based compensation[140][143] - SG&A expenses increased by 54% due to higher personnel costs, consulting and market access costs, share-based compensation, one-time severance costs, and regulatory fees for Libervant[144] Liquidity and Capital Resources The company's liquidity is supported by $77,893 thousand in cash and cash equivalents, significantly boosted by equity offerings, but it expects ongoing losses and negative cash flows, relying on external financing for product development and debt obligations Cash Flow Summary (In thousands) | Metric (9 Months Ended Sep 30) | 2024 | 2023 | | :----------------------------- | :---------- | :--------- | | Net cash used for operating activities | $(29,270) | $(1,438) | | Net cash used for investing activities | $(144) | $(979) | | Net cash provided by financing activities | $83,435 | $61 | | Net increase (decrease) in cash and cash equivalents | $54,021 | $(2,356) | - Net cash provided by financing activities increased by $83,374 thousand, primarily from $71,974 thousand in net proceeds from the Underwritten Public Offering and $11,855 thousand from the ATM facility[151][146] - The company expects to incur losses and negative cash flows for the foreseeable future, dependent on external financing to fund commercialization of Libervant and development of Anaphylm and AQST-108[154] - The company has significant debt with substantial ongoing interest payments and principal repayments for its 13.5% Notes starting in June 2026[154] Off-Balance Sheet Arrangements During the reported period, the company did not have any material off-balance sheet arrangements or relationships with unconsolidated entities or financial partnerships - No material off-balance sheet arrangements or relationships with unconsolidated entities during the period[156] PART II – OTHER INFORMATION Item 1. Legal Proceedings This section refers to Note 19, Contingencies, for detailed information on the company's legal proceedings, including product liability lawsuits related to Suboxone and intellectual property/competition litigation with Neurelis Inc - For details on legal proceedings, refer to Note 19, Contingencies, in the financial statements[160] Item 1A. Risk Factors This section directs readers to the company's 2023 Annual Report on Form 10-K for a comprehensive review of risks and uncertainties that could materially affect its business, financial condition, and results of operations - Readers should review the 'Risk Factors' section in the 2023 Annual Report on Form 10-K for information on risks and uncertainties[161] Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities The company reported no unregistered sales of equity securities, use of proceeds, or issuer purchases of equity securities during the period - No unregistered sales of equity securities, use of proceeds, or issuer purchases of equity securities were reported[161] Item 3. Defaults Upon Senior Securities The company reported no defaults upon senior securities during the period - No defaults upon senior securities were reported[161] Item 4. Mine Safety Disclosures This item is not applicable to the company - Mine Safety Disclosures are not applicable to the company[161] Item 5. Other Information CEO Daniel Barber and Senior Vice President Peter Boyd adopted Rule 10b5-1(c) sales plans in June and September 2024, respectively, allowing for the sale of a maximum of 650,055 shares for Barber and 35,000 shares for Boyd, dependent on certain conditions - CEO Daniel Barber adopted a Rule 10b5-1(c) sales plan on June 14, 2024, to sell up to 650,055 shares between September 13, 2024, and September 30, 2025[162] - Senior Vice President Peter Boyd adopted a Rule 10b5-1(c) sales plan on September 11, 2024, to sell up to 35,000 shares between December 13, 2024, and December 12, 2025[162] Item 6. Exhibits This section lists the exhibits filed or furnished as part of the report, including organizational documents, certifications from executive officers, and XBRL interactive data files - Exhibits include Amended and Restated Certificate of Incorporation, Amended and Restated Bylaws, certifications of principal executive and financial officers, and XBRL Instance, Schema, Calculation, Definition, Label, and Presentation Linkbase Documents[164]